Bloomberg News

Emerging Stocks Fall on Europe Debt Concern After Moody’s Cuts

February 14, 2012

Feb. 14 (Bloomberg) -- Emerging-market stocks fell, led by energy producers and industrial companies, after Moody’s Investors Service cut the debt ratings of six European nations.

The MSCI Emerging Markets Index lost 0.3 percent to 1,049.99 at 1:42 p.m. Hong Kong time. The Shanghai Composite Index dropped 0.5 percent. Sri Lanka’s Colombo All-Share Index plunged 3.4 percent, set for its lowest level since August 2010. The BSE India Sensitive Index, or Sensex, added 0.2 percent as the nation’s inflation rate slowed more than expected.

The U.K. and France may be stripped of their top Aaa ratings, Moody’s said as it reduced the debt rankings of countries including Italy, Spain and Portugal on concern economic weakness may threaten austerity programs and reforms. Standard & Poor’s and Fitch Ratings also cut European nation debt ratings in the past two months.

“Moody’s is just playing catch-up to the other two ratings agencies,” Raymond Tang, who manages 29 billion ringgit ($9.5 billion) as chief investment officer at CIMB-Principal Asset Management Bhd., said in a telephone interview in Kuala Lumpur today. “If there is no major shock, emerging markets will do better this year than last year.”

The MSCI Emerging Markets Index has gained 15 percent this year, following a 20 percent rout in 2011. The gauge’s advance has outpaced an 7.9 percent increase by the MSCI World Index of developed nations. The emerging-markets index is valued at 10.5 times estimated profit, compared with MSCI World’s multiple of 12.7 times, according to data compiled by Bloomberg.

Oil Producers

CNOOC Ltd., China’s biggest offshore energy producer, dropped the most in a month. SK Innovation Co., South Korea’s biggest oil refiner by market value, lost 2.1 percent.

Oil futures declined as much as 0.5 percent from a five- month high. Euro-area finance chiefs convene tomorrow for a meeting on financial aid for Greece, while a U.S. Energy Department report may show stockpiles climbed a fourth week, according to a Bloomberg News survey of analysts.

Zoomlion Heavy Industry Science & Technology Co., the Chinese maker of cranes and road machinery, sank 3.5 percent in Hong Kong after Credit Suisse Group AG advised in a note today taking profit in the stock following a more than 30 percent rally this year.

The Colombo All-Share Index has slumped 17 percent this year, the most among 93 major benchmark gauges tracked by Bloomberg. Stocks and the rupee have fallen as the government scrapped a currency trading band to help conserve foreign- exchange reserves, and boosted fuel prices.

Drugmaker Cipla Ltd. dropped 5.6 percent, the most since May 10, 2010, after its profit missed analysts’ estimates.

India’s benchmark wholesale-price index rose 6.55 percent in January from a year earlier, the least in more than two years, according to a commerce ministry report. That compares with the 6.7 percent median growth estimated by economists in a Bloomberg News survey and December’s 7.47 percent rate.

LG Electronics Inc., the world’s third-largest maker of mobile phones, advanced 3.1 percent in Seoul trading after Shinhan Investment Corp. raised its share-price estimate by 13 percent.

--With assistance from Zhang Shidong in Shanghai and Rajhkumar K Shaaw in Mumbai. Editors: Richard Frost, Allen Wan

To contact the reporter on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net

To contact the editor responsible for this story: Darren Boey in Hong Kong at dboey@bloomberg.net


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